24 comments

Analysis by FICO Score Trends service finds that borrowers with high FICO scores now defaulting on mortgages faster than bankcards

MINNEAPOLIS—February 23, 2009—FICO (NYSE:FICO), the leading provider of analytics and decision management technology, today announced new and troubling findings uncovered in the latest analysis offered by its subscription service for businesses, FICO® Score Trends. Reversing a long historic trend, mortgage default risk for consumers with high FICO® scores now exceeds their credit card default risk, even though most credit cards are unsecured credit and mortgages are secured by real estate. The company observed a parallel rise in mortgage delinquencies for higher-scoring U.S. consumers.

According to the analysis in FICO Score Trends, recent repayment behavior across the financial services industry has shifted significantly from historical trends. In 2008-2009, bankcard accounts were just 1.6 times more likely to become 90 days delinquent than were mortgage loans. By comparison, in 2005 bankcard accounts were more than three times more likely to become 90 days delinquent. And for borrowers scoring high on the FICO® score’s 300-850 score range, the level of repayment risk actually has become greater for real estate loans than for bankcards. In 2009, 0.3 percent of consumers with FICO scores between 760-789 defaulted on real estate loans, compared to 0.1 percent who defaulted on bankcards.

There was a study a while back. The gist of it was that the unsuccessful psychopaths were in prison. The successful psychopaths were highly successful businessmen. This was before the GFC. It’s possible that many of the corporate looters are psychopaths who haven’t gotten caught or punished. As far as identifying and figuring out what to do with them, neuroscience is rapidly advancing. The brain is the last frontier in medicine. It may be possible some day to limit their dopamine release chemically if a drug target can be found. Alternatively, if they can be screened young, perhaps young psychopaths can be trained to control their reward seeking behavior through meditation or training. If they can’t grow a conscience ever, then slot them into the military or some profession where a conscience is a detriment with no retirement possible. The alternative would be to abort them as fetuses assuming some genetic test could be found. It may be that if psychopathy is a recessive genetic trait, then it might be like sickle cell. One copy of the gene is advantageous, but two copies are detrimental. In this case, the person affected is a danger to others. The problem with psychiatric disorders is that genes which affect behavior are hard to pin down. That may change if they sequence a few psychopaths’ genomes. The cost has come down significantly to something like $5000/genome.

I think the only way to “take on China” is to take on Krugman and the rest of the “free”-traders.

The road to recovering true American prosperity is clear. Autarchy and relocalization are different ways of envisioning it. Here again, like with almost every other problem, the problem and the solution are the same. We’re saddled with this Wall St/Washington/MSM parasite, and we need to purge it.

In reading the other post on China and the comment thread, the thought I kept having is that it’s of course not “the US” vs. “China”, but the American people vs. the parasite which has hijacked America, and which is inseparable from the parasite which has hijacked China. That’s what rootless, psychopathic globalism is all about. A cadre like Krugman’s simply trying to help fire up the smoke machine. This smoke machine wants to cloud the people’s eyes with good old xenophobia. Let’s scapegoat “China” for not playing fair by the “rules” of “free” trade. Never mind that America plays by exactly the same “rules” when it, for example, engages in agricultural dumping in Africa.

Quite the opposite. Any rating agency even considering to withdraw AAA from the US is a joke. A country, which is only indebted in its own currency can not go bankrupt. Even in case of a currency reform, the US could just book an arbitrary amount of dollars on your account, or give you any amount of paper dollars.
You couldn’t buy anything with those dollars, but technically, there wouldn’t be a default.

It has been proven in repeated studies that people with strong sociopathic tendencies experience behavioral changes from only two events: institutionalization or death. In fact, psychotherapy often turns out to be a negative, as they use it as an opportunity to “improve their act”. One thing has been shown to at least indirectly reduce sociopathy in a population, which is inculcation of strong social values. It is hypothesized that this gives such personalities a form of psychological programming they feel compelled to follow, even if they see no emotional purpose in doing so.

Thanks for picking up on the Goldman derivative post and the ‘slight’ additional volume you threw my way today – I am sure the WordPress folks appreciate it, and I appreciate them :-)

But in all seriousness the value of the rating agencies has to at an intolerable low. I have the sense they sit there with their political finger (you choose) held up to test the wind, and then they decide which way to go.

Corporate ratings need to be redefined. Lets go outside of banks and look at a standard industrial – GM. They were insolvent and potentially bankrupt in 2004, with clues long before when you study their annual balance sheets. Yet it was not until 2005 that Moodys defined their bonds as junk, and others still maintained their B rating. How can a company with more liabilities than assets warrant that I ask?

One of the amusing beliefs of the rigid right lately is the dismissal of global warming because of the recent cold winters. But many armchair economists are equally concrete when they tremble at the thought of displeasing China because of the fear of THE MASSIVE DEBT.Well read say http://mpettis.com/ who puts China’s surplus into proper prospective. We should not be afraid to go after China trade and currency practices.
But there is is another action we can take closer to home. And that is to stop allowing US companies to manipulate taxation of foreign subsidies (http://www.nytimes.com/2009/05/05/business/05tax.html,http://www.taxfoundation.org/research/show/153.html.
While I in fact do not believe that Obama is now powerful enough to end this farce, he might be able to disallow such tax relief for profits earned in China.Right now DFI plants in China produced 80% of Chinese exports (SOE’s just 13%)
So end of the tax advantage could cut deeply into Chinese cost advantage.
Finally, it is a dream that if displaced from China, the jobs would come back to the US, especially “good paying Union jobs”.
Rather we needs to steer these jobs to Mexico and Central America. Which will help advance a reasonable immigration policy

How can we believe in Global Warming? Every @#$!% who opens his mouth lately LIES LIES LIES!! Gore tackles Global Warming and gets rich He’s as big a LIAR as all the rest of the idiots getting rich off the peasants.Gee why don’t we believe everything they tell us?